Hungary's 4iG to buy Magyar Telekom's T-Systems (updated)

4ig.

09/07/2019 12:04

* Transaction expected to close this year
    * 4iG has grown rapidly through state contracts
    * Says T-Systems deal is milestone in expansion drive

    BUDAPEST, July 9 (Reuters) - Hungarian information
technology company 4iG  IGNY.BU  has signed a preliminary deal
to buy its bigger rival T-Systems, which is owned by Magyar
Telekom.
    The deal was announced by the companies in a stock exchange
filing on Tuesday, with 4iG's CEO and largest shareholder
Gellert Jaszai saying it represents a milestone in the expansion
drive flagged by the company last month.
    Our growth can gain further impetus from a potential
strategic partnership with Magyar Telekom after the T-Systems
deal closes, Jaszai said in a statement.
    The price and other financial details were not disclosed and
the deal, which is expected to close this year, does not include
the segment of T-Systems focused on sales to small and
medium-sized businesses.
    Magyar Telekom is Deutsche Telekom's  DTEGn.DE 
majority-owned Hungarian business.
    Shares in 4iG, which provides IT services including hardware
and systems management, jumped more than 7.5% after the
announcement. 
    CEO Jaszai took control of 4iG last month by agreeing to buy
a 40% stake from Hungarian tycoon Lorinc Meszaros, a childhood
friend of Prime Minister Viktor Orban.
    Orban, who has been in power since 2010, has used growing
influence in Hungarian business life to promote a nationalist
agenda labelled by his ruling Fidesz party as the "System of
National Cooperation", or NER, which has come to dominate a host
of industries.     
    Jaszai told Reuters last month that 4iG planned to grow
through debt-fuelled acquisitions in the central European
region.  urn:newsml:reuters.com:*:nL8N23Q4J6
    The state is directly involved in several of Hungary's
business sectors, including information technology, and the
government has said it plans to participate in a 5G network
rollout valued at as much as 700 billion forints ($2.4 billion).
 urn:newsml:reuters.com:*:nL8N23P1HQ
    4iG reported 56% growth in revenues in the first quarter,
largely thanks to a string of state contracts secured after
Meszaros acquired a stake in June 2018.
    Magyar Telekom shares were up 1.8%, outperforming a 0.7%
rise for the Budapest bourse's main BUX index  .BUX .


 (Reporting by Krisztina Than
Editing by David Goodman)
 ((krisztina.than@tr.com))